Mayors pin urban hopes to private sector growth

Not in years has so much been expected of private enterprise by so many. President Reagan is looking to its robust growth, with the help of federal tax and regulatory incentives, as the cornerstone of America's revitalization efforts.

Increasingly, too, the nations' mayors, facing the prospect of fewer funds from Washington and Strictly limited income from existing tax sources, view economic development as the key to balancing their own budgets and keeping their cities alive. Many have moved intensively into the business of courting business just in the last year or two.

Virtually everyone attending the US Conference of Mayors here, including the Democrats, thus hopes the Reagan administration plan of action to stimulate private jobs and productivity will succeed.

"I hope the administration dives right in with its plan because we really need that economic growth," says William Crabbe, mayor of Steubenville, Ohio, where one steel plant recently has opened but where unemployment remains high.

"It's a pioneering effort that is really what this country has been needing," agrees Frank Duci, mayor of Schenectedy, N.Y.

But some mayors here clearly have their doubts that the administration plan will work.

"People have to have money to buy those private industry products," says G. C. DeBaun, mayor of Lakewood, Calif. "The ideas sound all right in theory, but I think Reagan is trying to go back to the days of Calvin Coolidge. What is forgotten is that they didn't work."

"I just don't think that anything can happen before interests rates go down," says Duncan Cameron, mayor of Lithonia, Ga. "I know lots of small companies that can't afford to expand -- they can't compete."

The one federal program aimed at stimulating private investment that enjoys the unanimous endorsement of the mayors here is the Urban Development Action Grant (UDAG) program. It provides federal seed money for specific projects such as downtown malls and hotels in the hopes of spurring more private development in the area. Since its start, UDAG is credited with the development of 500,000 new jobs and with returning well over $300 million in tax revenue to city coffers.

President Reagan originally planned to eliminate the program. But he was persuaded to give it at least a temporary stay by vigorous objections from big-city mayors and from Housing and Urban Development Secretary Samuel Pierce. As the secretary told the mayors assembled here, "I fought for its retention with you, and that made the difference."

Many mayors, however, question the efectiveness of the administration's proposed tax incentives in persuading the private sector to invest in deteriorating inner-city neighborhoods. Some say that without actual capital help with tax relief and without the inviting climate of a secure neighborhood offering good transportation and other advantages, there will not by many takers.

"Cities need to attract investment by positives," insists Ernest Morial, mayor of New Orleans. His administration has been actively involved in economic development efforts since his election two years ago, using UDAG grants and helping to start a citywide development corporation to make low-interest loans.

"You can't use the tax system to bribe thw private sector to do what it doesn't want to do," suggests David Smith, director of research at the National Center for Economic Alternatives, one of several guest speakers at the meeting. "It doesn't compare to labor, land, and other cost factors in the affecting corporate decisions."

Many mayors, and indeed the President himself, have some reservations about the current version of the so-called Kemp-Garcia enterprise zone bill now on Capitol Hill. There is widespread support for its basic theory of trying to encourage investment and the development of jobs in distressed urban areas. But it does not have the accompanying venture capital that many mayors would like to see. And in its current form it makes heavy demands on cities to reduce tax rates and regulations -- or to increase services to the areas as trade-offs.

"Most cities need all the local tax dollars they can get," stresses Mayor Morial.